A Community Foundation Playing a Big Role in the Next Health Care Battle: Payment Reform

Back in December, we wrote about the Rhode Island Foundation blazing a trail for health care reform by convening Rhode Island health care stakeholders and getting everyone to sign on to a reform agenda. A key plank of that agenda is expanding and developing "alternative reimbursement models that reward value and patient-centric care delivery." Translation: let's scrap fee-for-service. 

A few weeks later, we learned that this movement may have a national impact, with the Obama administration borrowing much of the language and many ideas of the Rhode Island health care reform agenda. In January, the Department of Health and Human Services announced ambitious goals for moving Medicare payments away from traditional fee-for-service reimbursement.

Finally, the national movement for payment reform has some real juice, with Uncle Sam in the lead. As Drew Altman, president of the Kaiser Foundation wrote in the Wall Street Journal, after the HHS announcement:

The public sector’s role driving innovation in health payment and delivery has been underappreciated... But Medicare and even Medicaid are driving innovation and change in health-care delivery and payment on a broad scale.

In turn, a number of funders have been gunning to take down the fee-for-service paradigm for some time, most notably the Robert Wood Johnson Foundation. And more power to them, because as we wrote back in May, that model "produces astonishing waste as self-interested health care providers run up the meter." If the U.S. health care sector can't rein in this excess and bend the cost curve, we'll never have the resources to ensure care for all Americans as Obamacare gets fully up and running and, later, as the boomers retire in huge numbers. 

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The Obama administration's new targets, which resemble the Whitehouse-Steinberg compact in several significant ways, are a first for Medicare and would fast-track federal use of accountable care, bundled payments, and other ways to pay hospitals and doctors. Specifically, these targets set a goal of tying 30 percent of traditional fee-for-service Medicare payments to alternative payment models by the end of 2016, and tying 50 percent of payments to these models by the end of 2018.

The origins of this breakthrough got us wondering: What is in the special sauce for health care reform in Rhode Island? And what lessons can funders and nonprofits in other states learn from looking at the proactive role played by the Rhode Island Foundation? To get at those questions, we talked with Neil Steinberg, president and CEO of the foundation.

Mr. Steinberg has decades of experiences in the business community, so he was able to play a critical role in convening the working group that created the Whitehouse-Steinberg Compact, a three-page document signed by 23 leaders in the health care community in Rhode Island, agreeing to a specific agenda.

After 28 years at the state’s largest bank, where he had risen to CEO when it was acquired by Bank of America, and now as head of the state’s largest charitable foundation with its focus on health care, Neil Steinberg was the right person in the right place to get Rhode Island's health care players on the same page. He had spent years developing a network in the state, and his connections and credibility in the business community and among policymakers was tremendously helpful.

Steinberg credits Senator Sheldon Whitehouse, a longtime leader on health care policy, with first convening a group of leaders in the state to talk about the future of health care in Rhode Island in early 2014. According to Steinberg, it was Whitehouse who identified the opportunity to move forward with a reform agenda with this group, realizing that this was a group "that could really get things done." Whitehouse then called on the Rhode Island Foundation, and Mr. Steinberg in particular, to convene another meeting in the middle of last year.

"The idea was to come up with a compact that everyone around the table would sign. And the goal was that over 3 or 4 months by the end of the calendar year, we would have a document that was reasonable in length, 3 pages, that we would present to the new governor and our legislative leaders to say, this is important, here's what we're going to commit to."

"There are a lot of efforts going on, and they're going in the same direction, because everyone agrees that costs can't keep going up the way they're going up," said Steinberg of the many efforts, both in Rhode Island, and across the country, to do something about our bloated and ineffective health care system. Steinberg described the "triple aim" of the health care leaders in the group they convened: better care models, better patient experience, and lower costs.

Steinberg talked about how in the creation of the compact, leaders in the state seemed to grasp that "the them is us." Partially because of the small size of the state, he noted, "we can get the people in the room who can actually do it and make the difference." The process of the group reaching consensus about the wastefulness of cost in health care was particularly exciting for Steinberg to witness:

I was fascinated. There seems to be a broad acknowledgement that there is 30 percent waste in the health care system. And the challenge is, you think it's my 30 percent and I think it's your 30 percent, and it's not like we can go around the table and everyone can chip in 2 percent.  It's not that easy. But that being said, is it less MRI's? Is it more efficient transmission of information? Is it more preventative work? 

Steinberg points to the state of Massachusetts which has worked on health care reform for longer than Rhode Island, and is pushing hard for improvement in costs. But he thinks Rhode Island has the business advantage of being the smallest state in the country, where collaboration might be a little easier to come by specifically because of the state's limited size. "We're trying to break new ground. It's a state of a million people. You can reach out and touch everybody."

Steinberg cites the high cost of health care as a drag on the state. "Health care costs 18.6 percent of Rhode Island's gross state product. That's high, and it's growing, and it crowds out money that can be used for other things."

But while health care costs are a drag, health care as a field can also be an economic development driver. We asked Steinberg about that piece of the picture. If Rhode Island significantly cut health care costs, would it negatively impact employment?

"That has come up," Steinberg acknowledged, and he recognized it as a valid concern, especially given the small size of the state and the already fragile nature of the local economy, with high unemployment and diminishing industries. He noted one counterargument to this concern is that with the reduced cost of health care, employers may be able to employ more people.

Steinberg also described ways in which health care labor markets may need to adopt models that support more home-based and community-based care. That may not mean a large overall reduction in employment, but a realignment with a more diverse spectrum of services.

Regardless, Steinberg thinks this is the time is to pursue new models of payment reform for health care. "I keep coming back to the urgency of it and the unique and critical point we are at when every single person in our compact agrees that we have to deal with the cost issue."

Getting the state's major health care leaders convened in a room and agreeing that the cost of health care is out of control is a big step forward. And the central role played by a community foundation is another reminder of how a key strength of these institutions can be their convening power.  

Meanwhile, Steinberg's fixation with bending the health care cost curve is yet more evidence that, with Obamacare in place and the battle for universal coverage almost won, the funding world is moving on to the next titanic struggle over health care: Making it both cheaper and better. 

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